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PIA Press Release
2009/06/11

RP's GNP growth forecast not bad as compared to neighbors Recto

Manila (11 June) -- Planning Secretary and National Economic and Development Authority (NEDA) Director General Ralph Recto said the 0.4 percent gross domestic product (GDP) growth projection for the quarter is "not totally bad," modest as it is.

Recto said the projection was "very conservative" but in the course of things "we have created more than 500,000 jobs, based on the report of the National Statistics Board, mostly coming from the services and agriculture sectors since the manufacturing sector contracted during the period."

Recto, however, said the Cabinet did not take up the first quarter growth forecast to be discussed first at the level of the Development Budget Coordinating Council (DBCC) which will be attended by all economic managers.

He expressed confidence the growth will assume an upward trend while inflation will go downward. Some of these assumptions will be discussed at the DBCC level, he added.

Comparing the country's growth with those of its neighbors, Recto disclosed that South Korea posted a -4.3 percent growth; Malaysia, -6.2%; Thailand, -7.1%; Hongkong, -7.8%; Singapore, -10.1%; and Taiwan, -10.2 %.

"At 0.4 real growth, ours is not that bad. It is still higher than our neighbors," he explained.

Recto said the GNP (gross national product) growth of 4.4 percent, already above our growth forecast and a GDP of 0.4, that mostly went into savings is again "not bad because at least people now have more savings reserve."

"We have very high savings rate compared to the US and Europe, both western and eastern Europe. So we are doing pretty good and that is why the stock exchange rose by 39 percent since its dip on March 9. It has now gone up by around 40 percent," he added.

He pointed out that "clearly the market shows our fundamentals pulling forward." Today in the Cabinet meeting, the country's 10 largest banks also showed double digit increases in their savings deposits. "That means people have savings," he said.

Many of the OFWs, he noted, brought with them fear stories of the countries where they worked, including stories of people who lost their jobs, banks collapsing and even the giant General Motors filing bankruptcy proceedings and so forth. "So together with the remittances they send back home they also brought with them fear stories," he said.

Recto also observed that OFWs now spend their money wisely. Where before they spent on non essentials, now they are buying houses that is why private consumption went up by 13 percent even as they tell their families to scrimp a little because of all these fear stories.

On reports that NEDA is overly optimistic in its forecast, Recto said: "I would rather be an optimist than a pessimist. Looking at our blessings as well as the negatives. our projections are realistic."

If we were negative six or negative seven like Taiwan, I think we should be pessimistic, he added.

On the deficit projection, he said, right now the P1.4 trillion budget is roughly 15-16% more than last year's budget. The deficit could be higher because revenue collections may contract like in the first four months of the year. (PIA) [top]

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